2013 Annual Meeting Education Presentations

For Educational Purposes Only*

Keynote Address Politics, Policy and the Economy: What Issues on Capitol Hill Mean for Main Street and Wall Street – Ron Insana, CNBC and MSNBC contributor

Ron Insana is a contributor to CNBC and MSNBC, where he discusses the most pressing economic and market issues of the day. He also delivers The Market Scoreboard Report to radio stations around the country. He has written for Money magazine and USA Today and has hosted two nationally syndicated radio programs. His upcoming investment newsletter, The Insana Quotient, will launch in mid-2013. In addition to his work as a business journalist, Insana was the CEO of Insana Capital Partners, from 2006-2008, which, at its peak, managed the $125 million Insana Capital Partners “Legends Fund.” For nearly three decades, Insana has been a highly respected business journalist and money manager, who began his career at the Financial News Network in 1984 and joined CNBC when FNN and CNBC merged in 1991.

Insana is well-known for his high-profile interviews, which have included Presidents Clinton and Bush; billionaire investors Warren Buffett, George Soros and Julian Robertson, among others; captains of industry from Bill Gates to Jack Welch to the late Steve Jobs; and top economists, analysts and global heads of state from former Soviet leader Mikhail Gorbachev to Jordan's current Queen, Rania. Insana was named one of the "Top 100 Business News Journalists of the 20th Century" and was nominated for a news and documentary Emmy for his role in NBC's coverage of 9/11. He has authored four books on Wall Street and is a highly regarded lecturer on domestic and global economics, financial markets and economic policy issues.

Real Estate Information Standards Update

This session will update attendees on the Real Estate Information Standards, the sponsors, valuation frequency and related valuation challenges, including valuing development properties and debt. The Real Estate Information Standards are an institutional private equity effort. Attendees will gain an understanding of the importance of frequent, timely valuations in this sector of the market. Additionally, valuation of development properties at various stages and related profit recognition issues will be addressed. Debt valuation has been an ongoing challenge and we will review several approaches and their market position. Attendees will emerge with insight into institutional investor requirements.

One Step Further – Practical Implementation of Guide Note 12

In releasing Guide Note 12, the Appraisal Institute once again has led the valuation profession in the direction of better service to clients and the general public. The guide note suggests that, beyond a single point-in-time value opinion, the appropriate scope of work for an assignment may require an appraiser to provide an opinion regarding the sustainability of the value. In that way, the appraisal becomes a more valuable tool in boom and bust periods, or even in more typical market cycles. But without a crystal ball or an incredibly involved study, can an appraiser reasonably make predictions about the future direction of the market? The answer is yes, but making such predictions requires a solid understanding of real estate market cycles. This session covers market cycles and introduces tools that appraisers can use to identify and report where in the cycle a market is on the valuation date. Concepts discussed include entrepreneurial incentive, frictional vacancy, feasibility rent, equilibrium rent, affordability analysis, fundamental market analysis and capital market analysis. Participants will leave with an understanding of ways they can use these tools to add an additional dimension to their appraisal work, without spending an inordinate amount of time.

Real Estate Damage Economics and Statistics

While many real estate transactions and projects go forward on a conventional basis, from time to time there are instances of damages or project delay that can result in economic losses. Such conditions might have positive, neutral or negative impacts on property value, depending on real estate market conditions, the use of the property or other specific issues and circumstances. A variety of valuation methodologies can be employed in these situations. Ultimately, it is the employment of valuation methodologies that are based in conventional approaches to value that will yield an analysis of the financial impacts. Damage economics, statistical modeling and project delay valuation approaches are invaluable resources in computing some types of damage. Indeed, damage economics has played a key role in computing the financial impacts in some of the world’s most complex real estate cases.

Experts from law enforcement agencies and the private sector who analyze trends in residential mortgage fraud will provide an update on law enforcement activities to combat residential mortgage fraud, provide an overview of schemes involving valuations, and discuss potential next steps to curb and/or prevent fraud. Additionally, the panel will discuss unique appraisal and business issues that result from working with law enforcement agencies as forensic valuation analysts.

Unmasking the Examination Process as it Pertains to Collateral Valuation

Understand the function of a real estate appraisal in a credit risk file. How does an appraiser qualify to prepare a report for a federal regulated institution? What are the supplemental requirements to prepare an appraisal which meets federal regulatory guidance? Who reviews the appraisal report? What is the review procedure? How does a federal examination team evaluate the real estate collateral in a credit file? What are the consequences if the appraisal report is found substandard? Discover the answers to these questions and more in this candid discussion on the preparing assignments for mortgage financing purposes.

Complex Litigation Appraisal Case Studies

Based on the Appraisal Institute’s new textbook Applications in Litigation Valuation: A Pragmatist’s Guide, this one-day seminar discusses in detail three of the book’s case studies that provide an overview of litigation strategies to appraisers who are new to litigation work, as well as a reinforcement of litigation skills to more experienced appraisers. Case study topics include the following: title issues, continuing nuisance, and condemnation.

If you have not attended the courses in the Litigation Professional Development Program, this seminar is an excellent starting point. If you have attended those courses, this seminar should reinforce many of the concepts you previously have learned.

Shawn Wilson, MA, owner, Compass Real Estate Consulting, Inc

If you are interested in purchasing the textbook or materials for this seminar, please click on this link (NOTE: Login is required to access site)

Income Approach for Residential Appraisers

Do you want to expand into 2- to 4-income property appraisals? If so, you won’t want to miss this new seminar! Using the income approach, you’ll learn how to accurately derive a value from an income stream with confidence and become familiar with the usefulness of the lesser-used income approach in the realities of a post-recession residential market. For many it will serve as a review of techniques learned yet unused. For others it will function as an introduction to the income capitalization approach, specifically the premise of the approach, the difference between gross and net rent, the difference between capitalization rates and multipliers, and the application of income capitalization using a gross rent multiplier. If your assignments are currently limited to performing mortgage appraisals, attend this seminar to learn how the income approach relates to value and watch your opportunities grow.

Richard C. DuBay, SRPA, SRA, owner, Appraisal Consultants

If you are interested in purchasing the textbook or materials for this seminar, please click on this link (NOTE: Login is required to access site)

Valuation Issues in Senior Housing

Attendees of this session will gain a greater understanding of property rights, going-concern value allocation issues and valuation methodologies for the development of the sale comparison, and income capitalization approaches for senior housing. The presenters, all of whom have national coverage, will provide their perspectives as both users and providers of appraisal services.

Valuation Issues in the Marcellus Shale

Pennsylvania is once again undergoing significant energy extraction activity due to the Marcellus Shale. Oil, coal and now deep gas are repeating previous booms. Bradford, the state’s second largest county, is the location of many of the most active gas extractors in the state. Come to this session for answers to the following questions: How do wells, compressor stations, gathering pipelines and water ponds affect property value? How does contamination of water supply affect value? Does methane contamination affect property value? How does the appraiser discount (if appropriate) these surface issues? How does the appraiser or Realtor assign a value to dormant gas rights when presented as a seller’s concession to a listing? What are the various concepts of lease terms? How are gas rights — prior to royalty income — valued? Can they be valued? What is the state view on dormant lease values?

Business Development for Appraisal Professionals

Appraisers need ongoing referral and business relationships that generate consistent streams of work. This program provides assistance with creating a personal business development plan plus practical know-how to make it work for you:

creating “tailored-to-succeed” personal marketing agendas -- manageable business plans of actions that generate work and new contacts;

communicating credentials -- written and verbal positive impressions that lead to work;

business development tool kit -- including social media, websites, testimonials, publications and more;

the fine art of asking for the work -- how to present yourself as the best choice for the job; and

keeping referral sources and clients close -- staying “front of mind” for clients and contacts.

The Appraisal Journal: Its Mission, the Review Process and Guidelines for Success in Getting Articles Published

This workshop will focus on the workings of The Appraisal Journal, including its mission, annual awards, review process and guidance for success in getting submissions published. Explanations of the rationale for acceptance or rejection will be offered as well as pitfalls that prospective authors should avoid.

What’s Your Energy Level?

If you are confused by the acronyms HERS Index, HES Rating, PECI and EUIs, this workshop is for you. This session will provide a basic understanding of the different energy rating systems, their background and the documents provided by the ratings that are critical to the appraisal process. Supporting a structure’s energy efficiency and physical traits is not as simple as assuring the structure is built to code. New building technologies provide improved energy efficiency and indoor air quality features that exceed most local building codes. Understanding the concepts and rating systems will prepare you to analyze data more accurately. You will leave the session with resources to put you on the right track to measuring your energy level for both residential and commercial properties. Be on the cutting edge of the trends and resources available for measuring your energy level.

A Closer Look at Right of Way Appraisal Issues

The session takes a closer look at some of the functional areas of right of way appraisal. It begins with an exploration of the identification, quantification and/or mitigation of damages. Identification and quantification of enhancements will also be included. The second topic area addresses some of the critical components of valuing easements which are often overlooked in right of way scenarios. The final area of focus will address valuation issues related to the acquisition of home owner association property, conservation easements and land subject to restrictive covenants. Time permitting, we will open the discussion to some of the problematic aspects of appraisal in the design/build arena.

This session will show real property appraisers how they can take their knowledge, training and experience and apply them to complex, real estate-related commercial litigation. Panelists will discuss damages theory, damages models, separating “junk science” from credible methodologies, drafting an expert report, and the thresholds that appraisers must meet to be qualified by the courts to testify as an expert. Attendees also will learn about defining the scope of work, structuring the retention agreement and services, preparing for deposition and trial, and how to be an expert witness, including effectively communicating an opinion and dealing with aggressive opposing counsel.

Environmental Risk Management Trends and Best Practices for Lenders and Appraisers

This session will address environmental due diligence best practices for lenders and appraisers, with a particular focus on risk management and liability mitigation. The session is designed to give appraisers with bank clients a broader understanding of the risks that bankers have to manage, especially since environmental risk management often falls under the purview of a bank’s chief appraiser. The panelists will present a case for banks to have proper protocols to ensure that best practices are in place to minimize risks, that there is an active and robust vendor management program, that the Environmental Protection Agency’s All Appropriate Inquiry standard is being adhered to, that recommendations for environmental due diligence are appropriate for the bank’s risk tolerance and their understanding of liability, that there are methods to bolster the environmental risk programs via outsourcing and that appraisers have a working knowledge of appropriate ASTM standards with the understanding that they are not environmental professionals.

What You Need to Know to Market Appraisal Services to Attorneys

Attend this session for a look at the current issues relating to real estate valuation in the legal community and how to effectively market appraisal services to lawyers. The goal of the panel’s presentation is to help AI valuation professionals market their services more effectively to the legal community. Topics will include: effective methods of marketing to the legal community; types of valuation work for lawyers (not every assignment will be litigation); and issues with appraisals used for legal purposes — litigation and non-litigation.

Examples of Quantitative Support Methods from Real World Appraisals

This session will explore examples of techniques employed by real world appraisers to solve unique appraisal challenges using quantitative methods to support their opinion. Each set of examples will represent a unique appraisal challenge that required a different approach to solving the valuation problem. The examples will range from the very simple to the more complex methods of supporting conclusions. Specific examples include supporting adjustments in the sales comparison approach for differences in apartment unit mixes, differing percentages of office finish in industrial properties, measuring the impact of different parking ratios for improved commercial properties, measuring the value impact of a triangular shaped retail lot and supporting time/market conditions adjustments in a changing market. Particular emphasis will be placed on the ability of, and the need for, appraisers to apply quantitative methods to support conclusions in their reports.

Gas Station Valuation: Real, Personal and Intangible Aspects

The first part of the session will examine the physical components, marketing strategies and development strategies of successful modern gas station properties. Topics will include traffic counts, building styles, convenience sales, fast food franchises, types of tanks and piping, trends in convenience stores, liquor licenses, specialty marketing and rewards programs. Participants will discuss the various aspects of real property, personal property and intangible property, and distinguish between them in real situations. The second part of the session will focus on valuing the modern gas station. Most of the time will be used to develop an appropriate income approach, although a brief overview of the sales comparison approach will also be covered. Topics addressed will include:

analyzing traffic count and competition,

sources of income: fuel and convenience goods,

developing margins on fuel and convenience sales,

fuel prices and impact of credit card fees and

impact of having a liquor license.

The program will be formatted to allow for some group discussion, with concepts and premises presented allowing participants to discuss and apply controversial topics. The session will provide the participant with tools and procedures to develop a credible, reliable gas station appraisal.

Rise in Real Estate Donations Means New Fee Opportunities

As the charitable world turns its attention to the use of real estate donations to meet its fundraising goals, appraisal services at every level become important elements in the gifting arrangements. For instance, in many cases, two appraisals are needed for a single property donation, and some corporations might insist upon three appraisals to support their donation of surplus property as a charitable tax deduction. Typically, however, a donor gets one appraisal to meet IRS requirements and the charity gets a second appraisal for the evaluation of financial risk factors. It’s clear that there is a huge developing market for Appraisal Institute professionals in the area of real estate donations. This session will cover how to market appraisal services to this new client base, an overview of the charitable world, opportunities for alliances within the Realtor community, case studies and tax implications surrounding the parties to the transaction. Currently more than 2 million charities that are registered under IRS guidelines receive more than $6 billion dollars in real estate equities every year with an additional $15 billion plus in offered properties being rejected for one reason or another. The workshop’s goal is to provide insight and education into this huge niche market that will enable AI professionals to increase their fee income. The CCIM Educational Foundation has seized on this opportunity for their members and is now providing educational seminars to their designees.

A Critical Analysis of Hedonic Modeling, Contingent Valuation and Loss of Use and Enjoyment as Applied to Damage Analysis

This session will provide an extensive discussion of the strengths and weaknesses of the application of these three methods to the development of an estimate of real estate damages resulting from a disamenity. It will include several case study examples and extensive discussion of both the theory and practice of the methods.

Ad Valorem Assessment Appeals – Professionals and Processes

Attendees of this session will gain a better understanding of the relationship between attorneys and corporate real estate executives in the real estate appraisal process. Panelists – including an attorney, a corporate real estate executive, an appraiser and a property tax consultant – will provide insight as to how they see their roles in this process. That discussion will be followed by an analysis of the legal aspects of the appeal process, the selection of appraisers, and the informal and formal hearings and/or trials. The session will end with a discussion on the appeals process, starting with the engagement of the assignment (phased), completion of the appraisal, feedback on the appraisal from the client and eventually expert testimony.

Global Real Estate Valuation Policy Update

Participants in this panel will hear updates on federal and state legislative and regulatory activities impacting real estate appraisers, including updates on legislative activity in the 113th Congress and state legislatures. The panel will also summarize major policy initiatives throughout the world, including bank examination/risk assessment efforts by global bank regulators, financial reporting and tax issues impacting real estate valuations. The panel will address the impact of the Dodd-Frank Act and will foster interactive discussions on the ways in which legislation can be improved in the future.

International Valuation Standards Council (IVSC) Update: “Raising the Bar for the Valuation Profession”

Founded in 1981, the IVSC first released global valuation standards in 1985 and recently published a major revision in 2011 (IVS 2011). Real estate is integral to IVS, consequently numerous projects related to investment and trade related property, forestry, extractive industries and public sector assets are currently underway. This session will provide an update on current IVS projects as well as background on the regulatory and standards setting environment both in the U.S. and internationally. The SEC, PCOAB, FASB, IASB and others, including auditing firms, have raised concerns about the consistency and quality of fair value measurements. The speakers will highlight the challenges that the profession faces and some of the initiatives the IVSC is leading. These initiatives include teaming with the Appraisal Institute and others to bring greater consistency to standards and the profession.

Valuation Compliance: Past, Present, & Future

Amid a myriad of federal and state regulations that must be followed across the supply chain, the appraisal process is ever-changing, with new rules implemented all the time. Strict adherence to compliance affects nearly every entity involved in the appraisal process. This session will explore current appraisal trends and where valuation services are headed. Attendees will gain valuable insight into what’s on the horizon and how to utilize strategies and best practices that will benefit organizations and individuals operating in a highly fluid business landscape.

Valuation of Multifamily Properties: The Perspective from the End-User

Despite the recent economic downturn, multifamily housing has remained the most successful real estate market. Since 2008, Freddie Mac and Fannie Mae have been a consistent source of transactional finance even when other lenders have scaled back the financing of other commercial property types. Additionally, the structure of this market has changed considerably since the mid-2000s as most loans purchased by the GSEs are now being securitized. With the increasing level of lending by the GSEs and with the additional scrutiny given to the documentation of each transaction by securitization participants, there is a greater need for real estate appraisers to be competent in the nuances of multifamily valuation. Furthermore, the Federal Housing Administration has a broad footprint in the multifamily market and has recently updated their policies to address valuation issues and questions. The panel will focus on those items that are unique to the valuation of multifamily properties. Included in this discussion will be a presentation on commonly found errors in multifamily appraisal reports and a discussion of the particular reporting requirements of the GSEs. Lastly, panelists will provide an overview of agency policy updates as they relate to real estate valuation.

Fostering Real Estate Risk Ratings in the United States

Real estate risk rating models have been developed in parts of Europe and are now being offered as a solution to improving risk management throughout the world. These models attempt to convey more information about the future relative to collateral risk. Real estate risk ratings go beyond single point of value (loan to value ratio) valuations, but convey (in a qualitative or quantitative format) assessments of long term risks relating to the property. Among other things, such systems may help financial institutions with risk management and the pricing of real estate investments in capital markets. Elements of the point-in-time valuation process are similar to a risk rating, in particular the reconciliation process within an appraisal. However, this process is not exposed to a standardized framework in support of a ratings system. This session will provide an overview of current real estate risk rating systems and will discuss ways in which such systems can be developed in the United States.

Insurance Replacement Valuation – An Emerging Appraisal Discipline

Stricter insurance requirements and unpredictable amounts of natural catastrophes will play a role for appraisers in the future. The requests for insurance appraisals will increase, and with that the need for appraisers educated about insurance laws and construction. To provide the best work in this field, Appraisal Institute professionals need to take the lead with education and better state regulation of this portion of the appraisal field. Specifically, many states do not consider insurance appraisals as an appraisal discipline per se and thus do not regulate their content or methods. Questions occur about these appraisals complying with USPAP and AI guidelines. Because most states don’t regulate insurance appraisals, unlicensed persons are performing insurance appraisals without appraisal training or state guidelines. This panel session seeks to begin a serious discussion among appraisal peers. Too many appraisers are dismissing insurance replacement valuation as a non-appraisal discipline, while at the same time, more non-appraisers are stepping into this market, often without the knowledge to provide reliable work.

Motorsports Facility Valuation Issues

This session will discuss contemporary valuation issues relative to motorsports facilities. Overview of the motorsports environment, history and future challenges relative to the primary types of motorsports facilities in the United States will be addressed. Going concern versus real property valuation issues will be discussed. Case studies will focus on the contribution of a premier spectator event at stadium-style racetracks, as well as privately owned and club-style road course facilities.

This presentation explores four or five condominium projects around the Twin Cities area, from original development through market challenges and eventual disposition. Each represents a unique situation, and each was handled in a different manner regarding the market challenges and the disposition strategies. Intertwined throughout the presentation of the case studies will be the unique valuation issues that came up during the various stages of the properties’ development through disposition. Particular emphasis will be placed on considerations that need to be made by appraisers in these situations, as well as practical approaches to handling the complex valuation issues.

VFR Preparedness for Real Estate Valuation Professionals

The financial professional community has been bombarded with threats of IFRS Convergence with U.S. GAAP since the year 2000. The International Financial Reporting Standards are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. Why should U.S. real estate valuation experts care about IFRS? The valuation profession is global and IFRS is making its way west, with some application already in Mexico, Canada and Australia. It is more than likely that IFRS will make its way to the United States and, at a minimum, those who work with foreign clients will need to be versed in its intricacies. As the Appraisal Institute is taking the lead in training and educating the best real estate valuation experts in the world, its professionals are encouraged to educate themselves on IFRS to prepare themselves for the next valuation frontier.

This seminar will cover the following: What is market value under IFRS and how does it differ from value in use? What is “mark-to-market?” What is the intended use of valuations under IFRS? What are the accounting standard codifications and how do they affect valuation under IFRS? What is the scope of work necessary to perform valuations for financial reporting under IFRS? What appraisal report format is necessary to perform valuations for financial reporting under IFRS? What is the status on U.S. REITs and Hedge-Fund conformity to IFRS?

The Future of the Valuation Profession

Even as the real estate market continues its slow recovery, the valuation profession continues to face numerous challenges. These include market conditions, government intervention, client expectations and many others. How will appraisers respond to these challenges? What opportunities may exist for appraisers? Where is the profession headed? Learn from a Designated member of the Appraisal Institute, who currently serves in The Appraisal Foundation’s top elected position, about his views on issues such as professional standards, qualifications, designations, education, ethics and methodology practices. Learn what may be on the horizon for appraisers.

Real Estate Data: What Will the Future Behold?

This general session will feature real estate data industry leaders who will outline trends and advances in technology impacting the data that is important to real estate valuation. Learn what the landscape will look like for data companies in the future, what new technological developments may affect real estate, and how valuation professionals should prepare to integrate new technologies and solutions into their practices and services.

Depreciation: Gaining an Understanding of Losses in Value

Depreciation is a part in every appraised property value. This session will address how to apply depreciation, which tools appraisers should use to do so and how to obtain consistent results that will stand up under appeal. Panelists will discuss the approaches used to determine the depreciation of real property; outline the three general depreciation categories (physical, functional and external); share best practices for applying depreciation to a property during assessment; and explain how to standardize the process for greater consistency in assessments.

It’s tough to run a service business. Clients buy appraisers’ expertise in blocks of time, so appraisers are always constrained by the number of hours in a day. No matter how good their services, they need to run their firm as a business to make the money they deserve. This session focuses on how to recognize and embrace the positive side of changes in the profession by offering practical strategies to ensure the commercial appraiser is prepared to meet an ever changing environment. Participants will learn how to maximize their time and resources, create a highly profitable service business through the implementation of technology and streamline their process through workflow automation, which will result in increased productivity and profitability. The program will cover time management, business operation metrics, data organization, useful and popular commercial real estate software and electronic communication products and trends. The primary objective is to introduce not only the technical options in a practical sense, but to show the benefit of embracing technology and improved processes. Through a "hands-on" approach, participants will get an introduction to, and information on, tools and skills to enable them to confidently improve how they do business. The program is interactive with case studies and verbal exercises.

Any session handouts represent the opinions and views of the speaker(s), developer(s) and/or reviewer(s). Although these materials may have been reviewed by members of the Appraisal Institute, the views and opinions expressed herein are not endorsed or approved by the Appraisal Institute as policy unless adopted by the Board of Directors pursuant to the Bylaws of the Appraisal Institute. While substantial care has been taken to provide accurate and current data and information, the Appraisal Institute does not warrant the accuracy or timeliness of the data and information contained herein. Further, any principles and conclusions presented in these handouts are subject to court decisions and to local, state, and federal laws and regulations and any revisions of such laws and regulations.

Any session handouts are presented for educational and informational purposes only with the understanding that the Appraisal Institute is not engaged in rendering legal, accounting, or other professional advice or services. Nothing in these materials is to be construed as the offering of such advice or services. If expert advice or services are required, readers are responsible for obtaining such advice or services from appropriate professionals.

Nondiscrimination Policy

The Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state, and local laws.